Asia ABS retreats to low-$1,900/tonne levels on weak demand

08 August 2012 09:08  [Source: ICIS news]

SINGAPORE (ICIS)--Asian acrylonitrile-butadiene-styrene (ABS) prices weakened this week to the low $1,900/tonne (€1,539/tonne) levels as traders liquidated stocks amid lacklustre regional demand, market sources said on Wednesday.

Spot prices were hovering at $2,000/tonne CFR (cost and freight) NE (northeast) Asia since mid-July up to early August, according to ICIS.

But buying interest abated after end-users accumulated some cargoes, taking out the support on prices.

“Traders have cheaper resins in hand purchased earlier and they can afford to reduce prices a little more to offload them,” said a producer in Taiwan.

A number of traders have stocks purchased previously at under $1,900/tonne, and were contemplating locking in profits and reducing their ABS holdings in view of the uncertain demand in the region.  

The Chinese exports sector remained weak into August despite the seasonal pick-up in manufacturing activities in the third quarter. Orders for finished goods from Europe and the US have been weak, resulting in slower consumption of resins, including ABS.

“The export sector is poor this year and many small-to-medium factories in China have limited orders for end-products,” said a Hong Kong-based trader.

Domestic demand for ABS in China has also weakened as the Chinese economy continued to slow down.

“The Chinese government will have to step in with some stimulus in order to prop up demand,” the trader said.

With the current demand outlook remaining unclear, traders are expected to reduce inventories further, which could result in further price pressures.

The ongoing debt crisis in Europe and the slowdown in the US and in a number of Asian economies are expected to weaken global economic growth this year.

ABS is a resin used in the manufacturing of appliances, consumer electronics, office equipment as well as the automotive and construction industry.

($1 = €0.81)

By: Clive Ong
+65 6780 4359

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